Shifting profit drivers: What shaped Banque Misr’s earnings in H1 2026?

Net profit alone offers an incomplete measure of a bank’s performance. A more revealing assessment lies in the composition of earnings, the sources driving profit growth and their capacity to sustain profitability over time.

Earnings may increase even as a principal income stream weakens, supported by stronger contributions from other activities or lower expenses.

Examining these underlying drivers is therefore essential to assessing the quality, composition and sustainability of profit growth.

This dynamic was evident in Banque Misr’s results for H1 2026, which showed an increase in profits despite a decline in net interest income, its largest income source.

The performance was supported by a sharp increase in trading income, growth in net fees and commissions income, and a significant decline in expected credit loss charges.

According to the bank’s standalone financial statements, profit before income tax rose 19.3 per cent to EGP 90.82bn in H1 2026, compared to EGP 76.11bn in the corresponding period of 2025.

Net profit also increased 14.4 per cent to EGP 57.47bn in H1 2026, compared to EGP 50.23bn in the same period of 2025.

However, what factors shaped Banque Misr’s profitability during H1 2026? How did its different income sources interact with expenses and credit loss charges, and what role did each play in determining its earnings?

Net interest income: The principal earnings driver under pressure

Net interest income remained Banque Misr’s largest income component, but declined 19.4 per cent to EGP 69.57bn in H1 2026, compared to EGP 86.29bn in the same period of 2025, marking a decrease of EGP 16.73bn.

The decline was driven by a 7.8 per cent decrease in interest and similar income from loans, which fell to EGP 274.69bn in H1 2026, compared to EGP 297.92bn in the corresponding period of 2025.

Meanwhile, interest and similar expense declined at a slower pace of 3.1 per cent, reaching EGP 205.13bn in H1 2026, compared to EGP 211.63bn in the same period of 2025.

Accordingly, the decline in interest expense generated savings of around EGP 6.50bn, which were insufficient to offset the EGP 23.23bn decrease in interest and similar income, resulting in a contraction in net interest income.

This divergence reflects the different pace at which income and funding costs respond to changes in banking activity. Lower funding costs do not necessarily preserve net interest income when interest and similar income declines at a faster rate.

Therefore, the bank’s ability to restore growth in net interest income remains a key factor in assessing its profitability outlook.

Net trading income: The key driver offsetting interest income declines

In contrast, net trading income surged 276 per cent to EGP 27.21bn in H1 2026, compared to EGP 7.24bn in the corresponding period of 2025, marking an increase of approximately EGP 19.97bn.

This increase exceeded the decline in net interest income by around EGP 3.25bn, highlighting the central role of trading income in supporting earnings and offsetting a substantial portion of the pressure on the bank’s primary income source.

These figures reflect a shift in the relative contribution of the bank’s income components, with trading income becoming significantly more important in explaining the growth in profitability during the period.

Fees, commissions and financial investments: Additional earnings support

Net fees and commissions income increased 27.2 per cent to EGP 17.57bn in H1 2026, compared to EGP 13.81bn in the same period of 2025, representing an increase of EGP 3.76bn.

This growth was driven by a 34.9 per cent increase in fees and commissions income, which reached EGP 20.26bn in H1 2026, compared to EGP 15.02bn in the corresponding period of 2025.

Meanwhile, related expenses rose 123.1 per cent to EGP 2.69bn in H1 2026, compared to EGP 1.21bn in the same period of 2025.

Despite the faster growth in expenses, the absolute increase in income exceeded the rise in related costs, enabling the bank to increase net fees and commissions income.

This performance highlights the importance of service-based income in diversifying profitability and reducing relative dependence on income generated from the deployment of funds.

Meanwhile, gains from financial investments increased 5.4 per cent to EGP 13.97bn in H1 2026, compared to EGP 13.24bn in the corresponding period of 2025.

Dividend income also rose 15.5 per cent to EGP 1.90bn in H1 2026, compared to EGP 1.65bn in the same period of 2025.

Expected credit losses: Lower charges support profitability

The decline in expected credit loss charges was among the key factors supporting Banque Misr’s results. Charges fell 90.3 per cent to EGP 1.66bn in H1 2026, compared to EGP 17.07bn in the corresponding period of 2025, representing a decrease of EGP 15.41bn.

This decline reduced the charges recognized against earnings for expected credit losses, allowing the bank to retain a larger share of its income during H1 2026.

The lower expected credit loss charges coincided with a decline in the non-performing loan (NPL) ratio to approximately 1.66 per cent at the end of June 2026, compared to 2.64 per cent at the end of June 2025.

This points to an improvement in asset quality indicators alongside lower charges associated with expected credit losses.

Expenses: The cost of expanding operations

Administrative expenses increased 25.9 per cent to EGP 35.13bn in H1 2026, compared to EGP 27.92bn in the corresponding period of 2025, representing an increase of approximately EGP 7.22bn.

Other operating expenses also rose sharply to EGP 2.61bn in H1 2026, compared to EGP 1.14bn in the same period of 2025, recording growth of 128.4 per cent. This reflects changes in the bank’s operating expense structure alongside growth in some income sources and a decline in others.

Profitability mix: Balancing interest income and trading gains

Banque Misr’s results highlight the importance of diversifying profitability drivers amid a decline in its primary income source. Trading income, fees and commissions, and financial investment gains, alongside lower expected credit loss charges, supported earnings during H1 2026.

The results underscore the importance of balancing growth in core banking income with stronger contributions from other activities, while maintaining effective asset management, controlling costs and containing credit risk.

Achieving this balance is essential to strengthening the resilience of the bank’s profitability structure and supporting sustainable earnings growth.